Finance Accounting Questions andCosting Accounting Questions: Two investments, C and D are being evaluated. They are mutually exclusive. Investment C has a higher NPV using any discount rate between zero and 9%, while D has a higher NPV using any discount rate between 9.1% and 15%. Which investment do you recommend the company undertake? The cost of both opportunities is the same. Which of the following is the BEST answer?

a. Recommend C if the required return is between zero and 9 percent. b. Recommend C if the required return is between 9.1% and 15%. c. Recommend C. d. Recommend D.

Capital rationing is described as: a. Selecting only the one opportunity with an expected return greater than the required return by the largest spread. b. Being allocated exactly enough capital to undertake all value creating opportunities. c. Having less capital than could be invested in value creating opportunities. d. Having as much capital as can be profitably investment in value creating opportunities.

An investment requires an initial outlay of $50,000, and is expected to generate cash flows of $13,000 a year for eight years. The required return is 11%. Determine the replacement chain NPV for this investment to compare it to a mutually exclusive alternative with a 12 year life. a. $53,782 b. $42,630 c. $21,320 d. $92,630